How To Choose A Trustee

How To Choose A Trustee – Are you setting up an estate plan and searching for someone to name as the trustee for your estate? Naturally, you likely considered naming a family member or friend as your estate’s trustee, seeing as they are the most familiar with you and vice versa. In most cases, family and friends would not think to charge you a trustee fee either, making them the more affordable option.

However, your family members and friends might be too close to you to make this decision ideal. While selecting a trustee who knows you and your family’s dynamics very well has its benefits, there are drawbacks to this decision as well, especially in the context of drama.

Opting for a trustee who is more distanced from your personal life might be the smarter decision because they will be able to view your beneficiaries and your estate plan through an unbiased lens. This way, you can ensure that everyone will be treated fairly.

For instance, consider selecting a family law attorney or an accountant who already has familiarity with your family. They might even agree to charge a lower rate compared with, say, a trust company or corporate option that has people with no prior knowledge about your family dynamics.

However, will the former option have the same structured approach to settling your estate as an official trust company does? The answer might be no, but is that even what you want? Consider your preferences and go from there. 

Trustees take on a lot of time-consuming tasks, and they work on accounts that can take years to finalize. There could be a number of liabilities and responsibilities on their shoulders as well when it comes to managing your estate and distributing all your assets to the appropriate beneficiaries.

To help you make an informed decision, let’s explore the pros and the cons of using a professional fiduciary versus a personal friend or family member as trustee.

1. Managing trust-related expenses

Think about the costs associated with hiring a professional as your estate’s trustee. Plus, the person whom you appoint as your trustee will more than likely hire other professionals whose main focus will be on helping the trustee manage your accounts. From attorneys and certified public accountants to custodians and investment managers, trustees usually don’t do everything on their own. And as always, there will be taxes involved.  

2. Making informed yet difficult decisions

Trustees are responsible for coming to conclusions that are not easy to make, but that’s their main goal. As such, you need to ensure that whomever you appoint as the trustee over your estate has the ability to maintain an objective perspective regarding trust-related matters.

3. Holding onto records and reports

Inquire about the potential trustee’s ability to file tax returns, keep accurate records and document matters in a traceable manner. These are qualities that trustees must absolutely embody, so do not overlook this aspect when choosing one.

4. Ensuring that assets are safeguarded

Insurance is just one of many ways trustees can ensure that your assets are safeguarded. When seeking a trustee for your estate, inquire about safeguarding protocols and what the trustee would do in the event that beneficiaries need assistance with the management of their share of your estate.

5. Offering consistent, reliable services

The trustee of your estate will be the main point of contact for your beneficiaries, so ask about their ability to communicate with various people and to help beneficiaries understand matters regarding the estate.

When you decide to hire a professional as your estate’s trustee, selecting the right person to take on the responsibility of managing your estate in your absence is not a process to take lightly. Remind yourself that the trustee will be the main person who oversees your accounts, handles your assets and distributes what must be disbursed to all your beneficiaries.

Not only must your trustee be trustworthy, but it is also imperative that they have a solid understanding of financial astuteness as well as intellect regarding how money should be managed or invested. Establishing a loved one as your trustee can result in significant concerns, and they are more likely to make emotional choices rather than decisions based in logic.

Ultimately, the choice is yours. If you still aren’t sure what you would prefer to do, reach out to a professional who handles estates and ask them to factually walk you through the pros and cons of choosing a family member or friend versus a company as your trustee.

Copyright, 2023

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William Hayes

As an attorney in private practice in Los Angeles County, California William Hayes provides extensive estate and tax planning services to individuals and businesses in Los Angeles, Pasadena, Glendale, Burbank and surrounding communities. Attorney Hayes’ primary focus is to help clients avoid probate, protect their assets, and provide for the security of their loved ones with a well-crafted estate plan. He believes in giving each client the time needed to explain his or her needs and wishes and then dedicates his efforts toward making the client’s desires clear in their final estate plan.

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